Annual Report 2012

Annual Report 2011

One of the hidden drivers behind Europe’s financial turmoil is the dramatic increase in resource prices over the last 10 years. Historically, cheap resources have helped fuel economic growth, but the situation has now changed. Increasing costs impose a burden on economic performance
that, in some cases, is reflected in rising debt levels. This, at a time when the ability of many countries to service this debt is being called into question.

Petroleum is becoming more difficult and costly to extract. But since our economies remain dependent on fossil fuels, we are taking greater risks to acquire it. Increasing demand, coupled with declining supplies, is leading to volatility and higher prices, characteristic of what some economists refer to as “peak oil.” Even the conservative International Energy Agency has acknowledged that oil production may peak in a decade’s time.

As prices rise, many countries must spend larger portions of their budgets on essential resources from abroad, often forgoing expenditures on health, education, infrastructure or other productive capacity building. People find it more difficult to make ends meet. The socio-economic impact of ecological overshoot, including climate change, disproportionately affects the most vulnerable.

The threats facing plant and animal life on the planet are greater than at any time in recorded history. Human pressure in the form of over-harvesting and habitat loss is driving down wildlife populations worldwide. In our economies, wild species have little value. As long as trees, for example, are worth more cut than they are standing, the pressures to liquidate natural resources will be overwhelming.

Soil erosion, rising fertilizer prices, and severe weather brought on by climate change have all contributed to the volatility of crop yields and food prices. This is particularly harsh in countries where most people depend on basic foods, such as unrefined grains and rice, which are more directly linked to global commodity prices than are the refined foods found in supermarkets.

In 2010 and 2011, people across the Arab world rose up against oppression and deprivation. But after the celebration of hard-earned victories, many countries will continue to face systemic challenges due to food insecurity, demographic trends, and water scarcity. Securing the future will depend on changes in the coming years to national policy that include resource limits as a central component.